Bank and thrift stocks, as well as the broader market, closed lower Thursday, Jan. 19, amid mixed earnings reports and ahead of Friday's presidential inauguration.
The SNL U.S. Bank Index slipped 0.57% to 520.91, and the SNL U.S. Thrift Index fell 0.74% to 936.19. In the broader market, the Dow Jones Industrial Average slid 0.37% to 19,732.40, the Nasdaq composite index dipped 0.28% to 5,540.08 and the S&P 500 declined 0.36% to 2,263.69.
Doug Sandler, chief U.S. equity officer at RiverFront Investment Group, said a dip in the market is "totally expected" as financials take a moment to digest following their postelection run. He added that fourth-quarter 2016 bank earnings reports released so far have been "mediocre."
"I think our expectations have outrun reality a little bit," Sandler said. "The reality is as fourth-quarter earnings come in, everything that Trump talked about didn't actually impact the quarter yet. That's not a surprise, because it takes a long time before interest rates can translate to higher net interest margin. It takes a while before hope about the economy translates into loan growth."
Several large banks released earnings reports today. Following their releases, BB&T Corp. dropped 1.97% to $45.29, KeyCorp fell 1.60% to $17.84, Bank of New York Mellon Corp. plummeted 3.01% to $44.84, M&T Bank Corp. gained 0.46% to $155.35 and People's United Financial Inc. lost 0.83% to $19.13.
During the company's earnings call, BB&T's CEO said the company is rethinking branch value and future M&A activity as the industry reaches a digital "tipping point." KeyCorp executives during their call said expenses are up, but so is fee income, alluding to a brighter 2017.
The nation's biggest banks were mostly down for the day. JPMorgan Chase & Co. declined 0.76% to $83.30, Wells Fargo & Co. added 0.57% to $54.58, Citigroup Inc. fell 1.27% to $56.66 and Bank of America Corp. dropped 0.44% to $22.53.
SunTrust Banks Inc., Citizens Financial Group Inc. and Regions Financial Corp. are slated to release their fourth-quarter 2016 earnings reports tomorrow, Jan. 20.
In the thrift space, Provident Bancorp Inc (MHC) lost 1.15% to $17.20, ASB Bancorp Inc. gained 2.31% to $31.00 and BofI Holding Inc. fell 2.49% to $27.38.
In economic news, the advance figure for seasonally adjusted initial jobless claims was 234,000 in the week ending Jan. 14, a decrease of 15,000 from the previous week's revised level of 249,000, according to the U.S. Department of Labor. The four-week moving average was 246,750, a decrease of 10,250 from the previous week's revised average of 257,000, and the lowest level for this average since Nov. 3, 1973, when it was 244,000.
Market prices and index values are current as of the time of publication and are subject to change.